BULLETIN NO.: MGR-95-013
TO: All Reinsured Companies
CFSA Headquarters, Program Delivery and Field Operations
All Risk Management Field Offices
FROM: Kenneth D. Ackerman
Acting Deputy Administrator
SUBJECT: Duplicate Insurance Policies
ISSUE:
There is a potential for a significant number of duplicate policies to be in
place this year. The purpose of this Bulletin is to remind program
participants of FCIC's rules for the resolution of duplicate policies.
The increase in duplicate policies may be due to misunderstandings over
linkage requirements mandated by the Federal Crop Insurance Reform Act of
1994 as some producers may have obtained duplicate catastrophic risk
protection (CAT) policies in order to assure eligibility for certain other
Department of Agriculture program benefits.
ACTION:
FCIC regulations prohibit producers from insuring the same crop in the same
county for the same crop year under more than one insurance policy.
When duplicate coverage is discovered by FCIC's data acceptance system (DAS),
the second policy received will be rejected. Rejection by the DAS is not a
determination of which policy should continue in force. Rather, it is the
responsibility of the insurance providers involved (reinsured companies and
Consolidated Farm Service Agency local offices) to determine in each case
which policy will be continued and which will be canceled, in accordance with
the following:
1. In general, if two or more applications are filed for the same crop and
crop year, the application filed first is valid and all others shall be
denied.
2. In general, if the producer submits Form FCIC-480, Cancellation/Transfer
of Experience, along with an application before the sales closing date,
all other policies, including those for which application is made in the
same crop year, shall be canceled.
3. However, if a CAT policy is previously obtained and a limited or
additional coverage policy is subsequently purchased for the same crop
year, the CAT policy must be canceled (see Subpart T General
Administrative Regulations, 400.655 (a)(3) and 1995 FCIC 18100
Catastrophic Risk Protection Handbook, Section 4, Par. F(2)).
4. If there is a carryover policy and a new policy for which a Form
FCIC-480, Cancellation/Transfer of Experience has not been executed,
the new policy must be canceled.
5. If coverage provided by a policy at less than the CAT level (50/60) is
subsequently duplicated with a new CAT policy but such policy remains in
force, then coverage must be increased to the required level by April 28,
1995 (see R&D-94-048 and R&D-94-048.1), and the new duplicate policy
must be canceled.
6. Any administrative fee paid for coverage that is subsequently canceled
because of duplication shall be refunded to the producer by the
insurance provider canceling the policy. The insurance provider
furnishing coverage for the crop shall collect the applicable
administrative fee from the producer.
7. An insurance provider may, at its sole discretion, mutually agree to
cancel coverage so long as coverage is maintained with another insurance
provider.
8. An insurance provider who cancels a policy or rejects an application
because of duplication shall notify the applicant/insured in writing of
that action.
Delays in resolving conflicts may have an adverse financial impact on the
insured producer as well as other insurance providers; therefore, all involved
parties shall resolve such conflicts for any policy that may be affected as
quickly as possible. Insurance providers shall cooperate fully with each
other to timely resolve the duplicate policy issues and eliminate farmer
confusion. This involves, but is not limited to, providing copies of all
relevant documentation and reviewing the matter with the other providers.